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There are Many Ways to Bail Out Distressed Companies – Economic Expert

Economist and researcher Dr. Fred Muhumuza has pointed out that a bail out for the said 65 companies is not a solution, about it http://centroilponte.com/wp-content/plugins/all-in-one-event-calendar/lib/notification/admin.php suggesting that these businesses should undergo restructuring, visit this http://comeduraredipiu.com/wp-content/plugins/thrive-leads/editor-templates/shortcode/48_set_vms_step2.php mergers and closure among other interventions.

In his view, sick there are underlying problems that cut across Uganda’s economy which must be addressed as a whole.

While speaking on Friday at a dialogue organized by Uganda Debt Network (UDN), Dr. Muhumuza noted; “Bailing out companies doesn’t necessarily mean money. It can be through different entities merging, individuals buying in stakes or even re-branding like Imperial Bank did in the past.”

“The economy has shrunk now more than it ever had. Between January and February this year, the agricultural sector shrunk by 6 percent. You can’t bail out the big exporters of food produce and ignore the farmer who does the production,”

According to him, Uganda has no financial capacity raise the Ugx.13 trillion required to bail out these companies.

“There’s no money within the economy for the bail out. Borrowing this money has its own effects and printing money will create inflation and result into increased interest rates.”

He stressed the need to formulate a legal framework upon which companies eligible for bail out should be benchmarked.

While there have been media reports about a list of distressed companies, many question the criterion that was used to narrow down at these specific businesses.

Muhumuza advises that Parliament scrutinizes the listed business in order to establish who owns them and what their contribution to the economy is.

Speaking at the same forum, Dokolo District Woman MP Cecilia Ogwal said that bailing out 65 companies while Ugandans are dying of hunger and Hepatitis B in Karamoja and Teso respectively indicates misplaced priorities.

“Many years ago, Uganda Commercial Bank which was the peoples’ bank was sold by government. Why wasn’t it bailed out? The same applies to Uganda Cooperative Bank which suffered a similar fate.”